ANTI-MONEY LAUNDERING (AML) / COUNTER-FINANCING OF ... · Narcotics Division, Security Bureau 1. 1. Standards of the Financial Action Task Force (FATF) 2. - 40 Recommendations •

Narcotics Division, Security Bureau

ANTI-MONEY LAUNDERING (AML) / COUNTER-FINANCING OF TERRORISM (CFT) – Be Our Gatekeepers

Mr Cyril Mak Narcotics Division Security Bureau


AGENDA

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1. Standards of the Financial Action Task Force (FATF)

- 40 Recommendations - Major requirements to Designated Non- Financial Businesses and Professions (DNFBPs) 2. Latest Development 3. Way Forward


1. 1. Standards of the Financial Action Task Force (FATF)

2. - 40 Recommendations

• The Financial Action Task Force (FATF) an inter-governmental body established to set standards

and promote effective implementation of measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system.

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Argentina Finland Italy Russian Federation

Australia France Japan Singapore

Austria Germany Kingdom of the Netherlands South Africa

Belgium Greece Luxembourg Spain

Brazil Gulf Co-operation Council Mexico Sweden

Canada Hong Kong, China (since 1991) New Zealand Switzerland

China (since 2007) Iceland Norway Turkey

Denmark India Portugal United Kingdom

European Commission Ireland Republic of Korea United States

FATF MEMBERS

(As of August 2015) 4

1. Standards of the Financial Action Task Force (FATF) - 40 Recommendations


THE FATF REQUIREMENTS

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40 Recommendations

( Feb 2012)


- 40 Recommendations

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• Money laundering and confiscation, Terrorist Financing and Financing of Proliferation

Criminalise ML/TF; means to detect, freeze, seize, confiscate proceeds and funding, freeze of terrorist assets, financial sanctions related to proliferation

• Preventive measures - financial institutions and DNFBPs CDD, record keeping, STR, internal control, regulatory and supervisory measures

• Power & responsibilities of competent authorities Financial Intelligence Unit, law enforcement authorities, supervisors; their powers &

resources

• International cooperation Mutual legal assistance, extradition, information exchange

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1. Standards of the Financial Action Task Force (FATF) - 40 Recommendations

Narcotics Division, Security Bureau 7

Financial Institutions

Trust & Company Services Providers

Lawyers

Accountants

Estate Agents

Dealers in Precious Stones and Metals

Casino


- Major requirements to DNFBPs


LAWYERS (Recommendation 22(d))

• buying / selling of real estates

• managing of client money, securities or other assets

• managing of bank, savings or securities accounts

• organisation of contributions for the creation, operation or management of companies

• creation, operation or management of legal persons or arrangements; buying / selling business entities

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1. Standards of the Financial Action Task Force (FATF) - Major requirements to DNFBPs

Narcotics Division, Security Bureau 9

To be set out in law CDD

(Rec. 10) STRs (Rec. 20)

Record Keeping (Rec. 11)

DNFBPs

Internal Control (Rec. 18)

1. Standards of the Financial Action Task Force (FATF) - Major requirements to DNFBPs


REGULATION AND SUPERVISION

DNFBPs

Competent authority or Self-regulatory Body (SRB)

(Rec. 28)

Sanctions (Rec. 35)

Guidelines (Rec. 34)

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- Major requirements to DNFBPs


2. Latest Development - 4th Mutual Evaluation

1st Mutual Evaluation 1994

2nd Mutual Evaluation 1998

3rd Mutual Evaluation 2007

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• Schedule - On-site visit: mid 2018 • Assessments - Technical Compliance - Effectiveness


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Risk Assessment

• A new Recommendation “Assessing Risks and Applying a Risk-based Approach” (Recommendation 1) was introduced in 2012

• Applies across all relevant FATF recommendations

• Essential reference for the mutual evaluation


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2. Latest Development - Recommendation 32

Establishment of a Reporting System on the Physical

Cross-Boundary Transportation of Large Quantities of Currency and Bearer Negotiable Instruments

- Have measures to detect physical cross-border transportation of currency and bearer negotiable instruments (CBNIs), including through a declaration and / or disclosure system

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Cross-boundary Transportation of over HKD $120,000

Proposed Reporting Type

Passengers Outgoing Disclosure

Incoming

Declaration Cargoes Outgoing & Incoming

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• End of consultation period on 20 October 2015

• Subject to the results of consultation, develop detailed legislative proposals for the system

• Relevant links http://www.nd.gov.hk/en/R32.htm

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LEGISLATION ON CDD &

RECORD KEEPING FOR DNFBPS

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3. WAY FORWARD

• Keeping in view FATF’s recommendations

• more detailed study and planning are needed

• continue to maintain dialogue with the

professional bodies / organisations


GUIDING PRINCIPLES

• Acknowledge the threat • Conform with international standards • Address HK’s own circumstances • Build up partnership

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3. WAY FORWARD


REFERENCES

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FATF

www.fatf-gafi.org Narcotic Division, Security Bureau

www.nd.gov.hk


THANK YOU

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Documents

ANTI-MONEY LAUNDERING (AML) / COUNTER-FINANCING OF ... · Narcotics Division, Security Bureau 1. 1. Standards of the Financial Action Task Force (FATF) 2. - 40 Recommendations •